"You and I, most of us, are going to survive the coronavirus. Sure, some of us will get sick, but we will recover—mainly by staying at home."
"You and I, most of us, are going to survive the coronavirus. Sure, some of us will get sick, but we will recover—mainly by staying at home."
One, the world’s Public Enemy No. 1, the greatest and deadliest in the last 100 years, is the coronavirus, otherwise known as the SARS-Cov-2. It causes the disease called COVID-19—for coronavirus infectious disease 2019.
It has brought the world to its knees, caused the most severe recession in history, locked down three billion people in 213 countries, crashed the price of crude oil to below zero, so far sickened more than 2.629 million people and killed 183,454. Daily, up to 70,000 people around the world are infected with COVID-19. And up to 5,000 die daily.
Two, in the Philippines, the virus has triggered the lockdown of the whole island of Luzon, the Philippines’ largest, most productive, and most populated island. With a population of more than 50 million, Luzon contributes 73 percent of the total output of goods and services, what you call GDP or Gross Domestic Product. GDP nationwide is P18 trillion. So 73 percent of that is P13.14 trillion. Divide that by 365 days, the coronavirus’ impact on the economy is P36.71 billion a day.
We are now on 39th day of the lockdown, a.k.a Enhanced Community Quarantine or ECQ, so the Philippine economy has lost P1.43 trillion worth of production. More than 90 percent of industries are shut down, more than 25 million are jobless, and 55 million Filipinos now wallow in poverty.
In Metro Manila alone, more than five million workers cannot go to work. They include the best, brightest and most strategic of our workers: 596,000 in manufacturing; 557,745 in accommodation and food services, 550,000 in BPO; 308,655 in public administration and defense; 151,620 in information and communications; 124,545 in finance and insurance; 113,715 in human health and social work; 11,625 in selected supermarkets; and 5,415 in water supply and sewerage.
The Philippines is 40th in the world in number of COVID-19 cases with 6,710 as of April 23, 2020, with 446 deaths. The Philippines is No. 3 in ASEAN in cases, behind Singapore, 10,141; and Indonesia, 7,135. In number of COVID-19 deaths, the Philippines is No. 2 in ASEAN, with 446 deaths, behind Indonesia’s 635 as of April 23.
Three, you and I, most of us, are going to survive the coronavirus. Sure, some of us will get sick, but we will recover—mainly by staying at home.
At worst, based on the experience of other countries, assuming all 110 million Filipinos were infected, only some .0001 percent of the population will probably die. That’s about 11,000 deaths.
Note, however, that New York state in America, has a population of less than 20 million and it has had so far 14,828 deaths. The Philippines is five and half times the population of New York state and so far, our deaths from COVID-19, are only 446.
Four, the coronavirus has hurt us where it matters to us, businessmen and professionals—in our pockets. They are now empty and riddled with holes. I am sure, majority of you have now negative bank balances. You have more debts than your income to pay for them. But don’t be embarrassed about it. Everybody is in the same financial rut. Everybody has no money.
Five, money is available for you, in case you become penniless. Pending in Congress are bills which will bail out big companies, which will provide cheap loans to small businesses in return for keeping their workers in their payroll, and allocate loans to services and industries considered essential or strategic to the economy and national security.
Even without those bills, however, the banking system is awash with money. Your banks have plenty of money.
As of the first semester of 2019, the Philippine banking system had a total loan portfolio of P10,083 billion. That’s 10 trillion pesos. That 10 trillion is only 58.5 percent of the banking system’s total resources of P17.23 billion.
Deduct P10 trillion from P17.23 trillion and you find the banking system still has P7.23 trillion of other assets. Included in those other assets are P4.07 trillion other loans and P2.359 trillion cash due from other banks.
Remember that the economic loss so far from the coronavirus is P1.43 trillion. So the banking system by itself has plenty of firepower—so to speak, to support those without cash, without working capital, without capex to restart their businesses.
Six, small businesses have so far gotten the short end of the bargain from the banks in terms of loans. Under Republic Act 6977, banks are required to allocate a certain amount of their loans to MSMEs—micro, small and medium enterprises.
As of end-June 2019, the banks have provided only P503.7 billion in total credit to MSMEs. That is below the P574.8 billion loans they gave to MSMEs as of end-2018.
Banks are supposed to provide 15 percent of their loans to agriculture. Their compliance is only 12.6 percent. The banks are supposed to provide 10 percent of their loans to agrarian reform credit. Their compliance is only 1.1 percent.
Based on total loanable funds of P5,292.5 billion, 15 percent is P793.87 billion—the amount—of bank loans that should have gone to agricultural credit. The banks provided only P666.6 billion, leaving P127.27 billion unused loans for agri credit.
The banks should have provided 10 percent of P5,292.5 billion or P529 billion for agrarian reform credit. They provided only P59.5 billion—leaving P469.5 billion unused for agrarian reform credit.
Add P127.27 billion to P469.5 billion, you get P596.77 billion. That is the idle money—P597 billion—that you as businessmen should get from the banks in rescue loans to restart your businesses and keep the jobs of your workers. This is even without thinking of stimulus package loans under bills pending in Congress. The Bangko Sentral should redeploy that idle money as rescue loans to businesses, big and small.
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To be continued